You can transfer funds between Betterment IRAs and most non-trust taxable accounts by logging in from a web browser and selecting Transfer or rollover > Transfer within Betterment.
Transfers involving IRAs will follow the same timelines and transaction limits as all other transfers at Betterment, and IRAs are always an Individual Investing account. You may refer to the Transaction Timelines and Transaction Limits tables for the expected timeline and limits on transfer frequency amounts depending on which taxable account you are transferring to or from.
Within accounts held at Betterment, we generally only allow transfers involving individual and joint investing accounts if you are listed as married to the account owner. Note: This requirement does not apply if you created the joint account and are the primary account owner. Confirm spouse details, or, if you are not married, contact us and we can help you with a manual transfer.
Transfers From Taxable Accounts To IRA Accounts
Transfers from Cash Reserve and other cash goals do not require the selling of shares, but please note that Betterment does not offer a cash position in IRA accounts. All transfers from Cash Reserve accounts and other cash goals into IRA accounts will result in funds being invested in the market according to the stock and bond allocation that is set for your IRA account.
Betterment will sell your shares in a way that seeks to minimize and defer taxes for you. We sell shares in a way that is intended to generate short term capital losses, long term capital losses, long term capital gains and then lastly, short term capital gains. Losses can generally be used to offset gains.
The algorithm exhausts each category before moving to the next. Within each category, lots purchased at the highest price are sold first. Ultimately, we are working to maximize your losses and minimize your gains, resulting in a lower tax burden. Learn more about how Betterment makes transactions more tax-efficient.
Betterment also calculates and displays an estimate of your tax impact for any transaction on the website when you type in an amount, before you commit to the transaction.
Transfers From IRA Accounts To Taxable Accounts
You can transfer funds from your IRA into a taxable investing goal or cash goal, however, taxes and penalties may apply. Please note that since we are not registered tax advisors, we cannot give specific tax advice about how your distribution might be taxed. For the best information about your individual circumstances, please consult a qualified tax professional.
Below are some general rules and resources regarding distributions from IRAs:
According to the IRS:
- For Roth IRAs, if you satisfy the requirements, qualified distributions are tax-free. However, a 10% penalty generally applies to the earnings if you withdraw before age 59.5.
- For Traditional IRAs, a 10% additional tax generally applies if you withdraw or use IRA assets before you reach age 59½.
During this process, you will be given the option to:
- Elect to withhold 10% or more (up to 100%) of the distribution;
- Elect not to withhold at all (0%).
Tax withholding is the percentage of income tax that you elect to have taken out of your IRA distribution and sent directly to the IRS as a prepayment. How much you should withhold is based upon your expected tax liability from the IRA distribution or from other sources of income, and since Betterment is not a tax advisor, we cannot assist in determining this figure for you.
You can learn more about these rules in the following IRS publication: Publication 590-B (2019), Distributions from Individual Retirement Arrangements (IRAs)